Alcoa To Expand Plant In Hampton

HAMPTON — Alcoa Howmet plans to invest up to $25 million in its Hampton operations, Gov. Timothy M. Kaine announced Monday.

Alcoa Howmet will increase its capacity and production of investment castings for industrial gas turbines, which are used primarily by utilities to generate power.

The expansion will create about 25 new jobs for skilled production employees by September 2011, said Jean Moorman, director of communications for Alcoa Power and Propulsion, a business unit of Alcoa.

The plant in Hampton is a division of Alcoa Power and Propulsion and the company's largest industrial gas turbine plant. It makes vanes and blades for turbines and produces superalloy and titanium aerospace structural components. It employs about 1,050 people.

The expansion is designed to meet a need for industrial gas turbines that's been growing since 2004, Moorman said.

"They expect that to continue until 2011," she said. "This positions us to meet that demand right now and as we go into the future."

Alcoa's investment is a three-year project that broke ground late in 2008, Moorman said. The expansion added about 19,000 square feet to the 472,000-square-foot complex and added a monoshell line and three furnaces.

Kaine approved a $500,000 performance-based grant from the Virginia Investment Partnership program - an incentive available to existing Virginia companies - for Alcoa. The Virginia Department of Business Assistance will offer training assistance through the Virginia Jobs Investment Program.

The state also sweetened the deal by granting Hampton the power to give Alcoa a break on machinery and tools taxes. The General Assembly earlier this year OK'd a change in the machinery tax that allows for a different classification for precision casting, the line of work Alcoa is in.

That paves the way for Hampton to potentially lower the tax rate.

Hampton city officials have discussed lowering the rate by 25 cents, from $3.50 to $3.25, for every $100 of assessed value, but no decision has been made.

That break would result in a decrease of $80,000 in taxes, said Ross Mugler, Hampton's commissioner of the revenue. Alcoa pays "well over" half the machinery tax the city collects, he said.

It's one of the ways the city is debating how to complement the state's investment with incentives valued up to $250,000 over several years, Hampton Economic Development Director Jimmy Eason said.

The issue could be placed on the council's August agenda, Eason said.

The tax break, if granted, would be offset by the taxes generated on the $22 million of new equipment, Eason said.

Hampton had been working with Alcoa to land the expansion for two years. City officials were told that Hampton wasn't the only site under consideration, Eason said.

"We took that seriously," he said. "That's why we worked as hard as we have to make this happen."

Initial reports suggested Alcoa could create hundreds of jobs through the expansion, but that projection has been pared to 25.

"Certainly because of the economic times, there is an abundance of caution," Eason said. "To make projections of X number of new jobs, they want to be careful, and I think you have to admire them for that."

Alcoa has been in Hampton since 1974.

"It's good to hear that some of our largest employers are doing well enough in this economic environment that they're committing to, what I would consider, a significant investment," Eason said.